Describing the provision of affordable housing as a shared responsibility, Bank Negara Malaysia (BNM) Governor Datuk Nor Shamsiah Mohd Yunus said the government is studying how infrastructure providers could help reduce house prices.

“There are three components which make up the biggest proportion of the cost, namely land, construction and infrastructure,” she said in an interview with Bernama.

“There is a greater recognition now on the need to reduce costs. For land costs, the government is collaborating with the state government on mechanisms to reduce costs; and for construction costs — that is where the government is looking to leverage technology such as the IBS (Industrialised Building System) to bring down the cost.”

The Governor underscored the need to “adopt strategies to raise income levels of households to make housing more affordable to the rakyat”.

House price growth has outpaced household income over the period 2007 to 2016.

According to the median multiple approach, a residential property is considered unaffordable if its priced over three times the annual household income. Malaysia’s is at 4.8 times.

“Let’s take the B40 for example. With their median monthly income of RM3,000, they can only afford houses up to around RM108,000 — three times their annual income…If you look at the 68% of total unsold residential units, they are above RM300,000. That is why we also have to address the supply-demand mismatch,” she said.

“While there is demand for affordable housing, the developers are building outside the affordable reach of the majority of Malaysians.”

BNM recently expanded the eligibility criteria for its RM1 billion Fund for Affordable Homes. It raised the applicant’s maximum household income from RM2,300 to RM4,360 as well as the maximum property price from RM150,000 to RM300,000.

Nor Shamsiah also reiterated the importance of the Guidelines on Responsible Financing.

“The Guidelines on Responsible Financing is still relevant because the main objective of these guidelines is to ensure that borrowers are able to afford the loan and can benefit from it,” she said.

“So, if a customer is taking the loan to buy a house, the customer should eventually own the house at the end of their loan tenure. Ultimately, the banks and the borrowers should also be responsible in the decision. It works both ways.”

With this, the Governor revealed that a lot of efforts has been taken to educate consumers relevant to credit and financial management, particularly via the Credit Counselling and Debt Management Agency, which is also known as Agensi Kaunseling & Pengurusan Kredit (AKPK).

To alleviate the burden in coping with the increasing cost of living, especially those in the B40 and M40 groups, Nor Shamsiah shared that the central bank has also been highlighting the importance of improving technical skills as well as reforming the labour market and education system.

“There needs to be greater collaboration between training providers and the industry players to ensure Malaysia produces graduates with the right skills,” she said.